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Monday, 19 November 2012

Since Kats and humans have collectively come quite close to exhausting not only the subject but also the blog-reading public on the subject of Europe's unitary patent and unified patent litigation prospects, Merpel sees no reason why she shouldn't join in the fun. The events of the past year have reassured her that knowing nothing at all about how the patent system operates in legal, administrative and economic terms is no bar to pronouncing on the subject, so Merpel will have her say too. And this is what she says:

The rumours can no longer be denied: there is going to be a further, fresh proposal for a compromise text floating around which has been crafted so as to replace the original and much-criticised Articles 6-8 of the Unitary Patent Protection Regulation.

All around the Continent, from Cadiz to Corinth, from Sweden to Sicily, speculation has been rife as to what the new text might contain. Is it true that a whole new complex verbal formula has been forged which will allow Europe's finest legislators, policy makers and negotiators to avoid having to use the word “infringement”? And is it true that the rules of engagement of the Unified Patent Court (UPC) will be replete with references to the application of national law? This is what this Kat's ears hear.

If the rumours are true it could mean that, for European Union-based holders of patents, the place of domicile determines applicable national law while for non-EU patentees, in contrast, German national law would apply. If the UPC found itself obliged to apply different national laws in the case of unitary patents -- even though that application would be with uniform effect -- it appears that litigation might produce quite different results, depending on the domicile of the patentee. This in turn suggest that the product of the past few years' mammoth effort to produce unitary effect for patents would actually be, er, divergence.

The rumoured final texts thus seems to introduce a new level of complexity and fragmentation which those of us who dreamed of a single patent having single effect across a single market had never previously envisaged. Indeed, the potential for divergent jurisprudence may even be greater than would have been the case if the interference by the Court of Justice of the European Union (CJEU) -- which the compromise language was seeking to remedy -- had been allowed to occur in the first place.

But what about that curious new wording which seeks to avoid using the word “infringement”? Might it mean that UK national law would apply to both infringement and validity of a unitary patent owned by a British-based company such as BT or GSK, Dutch law for Philips’ unitary patents, Swedish law for Ericsson’s, Finnish law for Nokia’s and -- for all non-EU companies -- German national law?.

Now, says Merpel, drawing herself up to her full height and putting on her ever-so-teacher-y voice, let us imagine the following scenarios:

* Where a UK company is the defendant: Britco is sued for infringement in Greece by a US patentee who is the proud owner of an English-language unitary patent. The language of the proceedings would be Greek. The text of the patent is in English. The applicable national law is German (as applied by the Greek national division).

* Where a UK company is the plaintiff: this time Britco sues for infringement in Greece on an English-language unitary patent. The language of proceedings would be Greek. The text of the patent is in English. The applicable national law is English.

The final element mentioned in each of these hypothetical situations -- the applicable national law -- provides the new twist in each case and the potential for divergent jurisprudence in the UPC seems enormous. So why is it that hardly anyone seems to be aware of this potential new complication? Why has no-one appreciated the risk of fragmentation which prima facie seems monstrous? At this point Merpel can almost hear the plaintive mewing of a thousand patent attorneys: "come back, CJEU, all is forgiven!"

[The questions posed in the previous paragraph are rhetorical. The reason no-one worries about this is that the texts are deadly secret, like all the best Soviet legislation in the days of Stalin, and Merpel had to kiss a few Eurocrats to get sight of them. O tempora, o mores].

UK practitioners and patent owners can expect to receive no sympathy from the UK government because, adding rumour to rumour, there is a suspicion the monstrous language which has replaced the objectionable earlier drafts with something even worse was actually coined in that Scepter'd Isle, forged in that formidable Verbal Smithy in which Shakespeare and Milton, Keats and Shelley, Wallace and Gromit hammered out their mortal prose. And, says rumour, the UK government even approves of it!

So what can be done? Maybe not much. But we can at least draw attention to this nonsense and ask whether it is truly better to secure a patched-up nonsense result such as this than to have no result at all.

Actually, I wanted to follow the session via live broadcast - although, as we were told, even Commissioner Barnier attended the hearing (which was understood as proof that an agreement would be reached), there was no live broadcast. So one can only speculate what was discussed behind the closed doors. Democracy in Europe in the year 2012!

Wow! Just, wow! I don't like using hyperbole in online comments, but if the above proposal really is going to get passed, it will be massively open to forum shopping and abuse.

The jurisdiction provisions from the CTM Regulation would have been a sensible starting point, but I imagine that this was rejected when the framers of the draft Regulation realised that people could forum-shop by using operating companies domiciled in the jurisdiction with the most anti-patentee courts (i.e. not Germany). However, at least all CTM courts have to apply the same, uniform EU laws. To allow EEUPC courts to apply the laws of different member states (as I understand the latest proposal will do) surely undermines the whole point in harmonisation. Legal costs will inevitably increase, and litigation will become even more uncertain.

I am really going to enjoy explaining the new court structure to clients and non-EU lawyers.

After having read the actual proposal, I'm now less nervous. Sure, it's an inelegant mess, but the extent to which national law would be applicable is actually extremely limited. Infringement is pretty much dealt with by the UPC agreement proposal, I can't see any loose ends to which the national law of the patentee would be applicable.

@anonymous 9:50 AM - I haven't read the actual proposal - could you please post a link or summarise where national law is to be taken into account?

My concern is that, at the moment, national infringement laws are largely based on the CPC (at least to my knowledge). However, this has not stopped different EU countries adopting completely different approaches to infringement, even when they both take the same document (the CPC) as their basis, e.g. UK purposive contruction vs. German doctrine of equivalents.

Does the latest EU proposal deal with these differences in approach? The UPC agreement (from memory) does not.

Another view is that it might work quite well. Forum-shopping is inevitable, unless all eggs are to be put in one basket. European patent judges have begun to take notice of each other's decisions so that national laws may draw closer together. Isn't this better than having the CJEU reinventing the law from first principles? Who'd like to bet on that coming out right?

Anonymous@ 11:45: The text of the compromise has been purportedly leaked to the PCinpact website, linked to by Gibus two posts below:http://static.pcinpact.com/images/bd/news/123418.png

I'd rather prefer if the EU Council acted more transparently, but that's what we have. As for the content of the proposal, it's, as I say, a horribly inelegant solution, which may have some unintended consequences down the road, but its shortcomings may still be hammered out in the UPC proposal.

I frankly would have preferred to keep Arts. 6-8, and hope that the ugliness of this solution may still make some people reflect on their past criticism. But it could be much worse.

Think about substantive patent law in Europe on the eligibility of computer-implemented inventions. The various Technical Boards of Appeal of the EPO did a good enough job of reaching consensus that the EBA was able to find nothing wrong.

Now look at the substantive law of infringement. We would rather not have the CJEU playing the EBA role and, anyway, the national equivalents of those Technical Boards have already reached more or less consensus. Purposive construction or a Doctrine of Equivalents? So long as all courts balance fair protection with reasonable legal certainty, there won't be much to complain about will there? The most important thing is to engineer ever more convergence. The convergence record of the last 30 years in Europe really is quite good, on both validity and infringement. Don't do harm to that trend, I say. just as Germany came around to the European view on novelty, after 30 years, so in another 30 years everybody will have the same purposive construction (or Doctrine of Equivalents).

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